FASH:Services sector activity rises slightly

Activity in the Australian services sector expanded in September for the second consecutive month, with some sub-sectors helped by the mining boom, a private survey shows.

The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (PSI) fell 1.8 point to 50.3 points in September. A reading above 50 indicates an increase in activity.

Commonwealth Bank senior economist James McIntyre said expansion in services sector activity showed the resilience of some parts of the Australian economy despite weak global conditions.

"The economy is caught between the sentiment and financial market impacts stemming from Europe's sovereign debt crisis, and the longer-run positive impacts of Asia's emergence and development," Mr McIntyre said.

"Consumer-related sectors (such as retail and personal services) weakened as shell-shocked consumers exercised caution. Meanwhile, conditions in business-related sectors (such as property and business services, and transport and storage) were stronger, as the mining boom benefits trickle through the economy."

Five of the nine service sub-sectors reported an increase in activity in September, with finance and insurance and communications services posting the strongest growth. The retail trade sub-sector posted the worst result of all the sectors in September.

Australian Industry Group (Ai Group) chief executive
Heather Ridout
said activity in the services sector may have stabilised.

"Encouragingly, sales and new order levels have increased in three of the past four months underpinning the performance of the sector," she said. "However, major sub sectors such as retail remain weak, which is a real concern, reflecting cautious consumers and soft commercial construction activity."